Survey Finds Friends Determine Millennials' Financial Habits
By Deanna C. White
Millennials may be incredibly savvy when it comes to using technology to research nearly every decision they make, but when it comes to determining their financial habits, a new survey suggests they're still relying on the oldest network in the world to guide their decisions: their friends.
According to a national poll commissioned by the American Institute of CPAs (AICPA) and the Ad Council, three quarters of young adults, or 78 percent, use their friends' financial habits to determine their own. The vast majority, 66 percent, wants to keep pace with their peers on where they live, and 64 percent say the same thing about their attire. Nearly two-thirds experience pressure to keep up with the types of places they eat and the gadgets they carry.
At the same time, in the past year alone, almost half of adults between the ages of twenty-five and thirty-four had to use a credit card to pay for necessities like food or utilities, and more than a quarter missed a bill payment or were contacted by a bill collector, according to the survey. Sixty-one percent still get financial assistance from their family.
"As the old saying goes: Be careful about the company you keep", said Ernie Almonte, CPA, chair of the AICPA's National Financial Literacy Commission. "Many young adults are building financial foundations with the wrong blueprints. They need to make sure they're modeling the best behavior for their long-term financial stability."
The online survey, which was conducted in October 2013, queried adults between the ages of twenty-five and thirty-four who were currently employed. The AICPA and the Ad Council released the survey results October 30 to coincide with a new series of national public service advertisements (PSAs) and a redesigned website for their Feed the Pig financial literacy campaign.
According the campaign's creators, the PSAs "[tap] into Millennials' desire for belonging and its impact on their financial well-being in a lighthearted way." The PSAs urge Millennials to think for themselves, instead of blindly following their friends' example, when crafting their financial future.
The television PSAs feature scenes of lavish spending contrasted by financial achievement, according to the AICPA. One PSA juxtaposes a college student paying off her student debt while her friend lounges in a formal dress and designer shoes as she feeds a pet horse, all while bemoaning the fact she can never save enough to get ahead.
The television PSAs follow the campaign's summer print, outdoor, radio, and digital PSAs, which urged the target audience",When it comes to financial stability, don't get left behind."
"Young adults are in the midst of making critical financial decisions about family and careers and are establishing the spending and saving patterns that often last throughout their lives", added Peggy Conlon, president and CEO of the Ad Council. "Our new PSAs tap into the insight that this generation is strongly influenced by their peers when it comes to lifestyle purchases, but our goal is to extend that peer pressure to also include saving for the future."
The PSAs also direct viewers to www.feedthepig.org, the campaign's financial literacy website, which, Almonte said, is also designed to give young adults, and the CPAs who serve them, the necessary tools to plan a bright financial future.
"It's clear from our survey and all the research that went into the new Feed the Pig campaign that [young adults] are not always looking to the best role models", Almonte said. "CPAs, through resources like Feed the Pig, can help them get on stronger financial footing."
In addition to a host of money management tips and tools, the redesigned website, which launched in October, features personal finance calculators and short- , mid- , and long-term action plans for achieving goals like buying a house, starting a family, or paying off debt.
"We learned in our research that Millennials want specific checklists and plans to help them manage their money. So as part of the redesign, we developed a brand-new tool: You Save", Almonte said. "It helps young people tackle financial goals like paying down debt, saving for retirement, and raising credit scores by outlining specific steps for success. The new site also offers a new set of calculators so young adults can explore different scenarios and better understand the effects of their financial decisions."
The campaign also directs young adults to Feed the Pig's Facebook and Twitter pages to ask questions and engage with financial experts. The next Facebook chat, Looking Ahead: Year-end Tax and Financial Planning for Your Budget, will take place from 1:00 to 2:00 p.m. ET, Thursday, November 21.
Alex Swain, a "Millennial CPA" and one of the narrators of the Ohio Society of CPA's (OSCPA) new video series, Investing in Your Future: Top Financial Strategies for Young Adults, agrees the survey, at least partially, reflects her peer group.
"On the surface, I think Millennials look to their friends' financial habits to determine their own. Compared to our friends, we pay a similar amount in rent and choose to go to similar types of restaurants and bars", Swain said. "But in reality, it would be unusual to discuss specific financial habits with our friends. The size of our savings accounts, the strategies we are using to pay off student debt, and the amount of assistance we get from our parents are not common discussion topics."
Swain wholeheartedly believes the "peer pressure to save for the future" created by the PSAs can positively impact Millennial spending habits.
"PSAs can encourage better spending habits among young adults. 'Peer pressure' through social media or through interactions with friends can encourage positive spending habits. If you see a friend packing his lunch to save money, you might feel more comfortable doing the same", Swain said. "Similarly, a short web video might plant the seed on the positive financial impact of starting a savings account at a young age."
Swain also encourages her fellow Millennial CPAs to engage their friends and peers in discussions about financial habits and to share articles or tools they find helpful to aid in building greater financial acumen in their communities.
The new nationwide online survey was administered by the Ad Council, conducted by Lightspeed Research, and reached a representative sample of men and women. The survey also found:
- Seventy percent of young adults said financial stability to them means paying all their bills each month.
- Women feel more financially stable than men.
- Men find it more important than women to keep up with their friends.
The AICPA and the Ad Council first launched the Feed the Pig financial literacy campaign in 2006. To date, the campaign has received over $277 million in donated media support. Per the Ad Council's model, the new series of PSAs will be distributed to over 33,000 networks nationwide and continue to run in airtime and space donated by the media.